WHY Vodafone Idea shares continue to decline - What stock investors should know

The shares of M Vodafone Idea (Vi) have been on the decline for the second straight session on Friday, after its FY21 fourth quarter’s losses widen to over Rs 7000 crore.

On Wednesday, the telecom company reported a net loss of Rs 7,022.8 crore in Q4: PTI

The shares of Vodafone Idea (Vi) have been on the decline for the second straight session on Friday after its FY21 fourth quarter’s losses widen to over Rs 7000 crore.

The stock today fell by three and a half per cent to Rs 8.75 per share on the BSE intraday trade, while in the last two days, it has declined by over 12 per cent from Rs 9.95 apiece, Wednesday’s closing.

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Seeking a buffer from the Department of Telecom (DoT), the company has written to the regulator, news agency Press Trust of India (PTI) reported.

Vodafone Idea in a letter has sought a one-year moratorium on payment of spectrum installment of over Rs 8,200 crore, due in April 2022.

As per the letter, seen by PTI, the company has requested the DoT to grant it another year of the moratorium to pay this installment in April 2023 instead of April 2022 and has made it clear that ‘it is almost inevitable' that the firm won’t be able to pay the said amount in April 2022.

On Wednesday, the telecom company reported a net loss of Rs 7,022.8 crore in Q4 as compared to Rs 4,532.4 crore in the previous quarter (Q3), while it had posted Rs 11,643 crore net loss in the same quarter last year (year-on-year basis).

The total revenue of Vodafone Idea from operations slipped by near 12 per cent to Rs 9,607.6 crore in Q4 versus Rs 10,894 crore in Q3. It reported an exceptional loss of Rs 974.3 crore in Q4.

Even, the brokerage firms have been sceptical about this counter, as CLSA gave an Underperform call, while pointing out that the AGR headache for a financial crisis when annual payments come due.

Similarly, Goldman Sachs maintaining Sell stance said the company has large repayments due starting December 2021; it may have a Rs 23,400 crore cash shortfall until April 2022.

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